republished from law.com
Marketers are always testing the boundaries as it pertains to getting eyes to focus on messaging. For example, if you ever visit website applications, you’ve surely came across advertisements that are almost indistinguishable from the content in the website as they are ‘native to the experience’ of the platform or service that is being used. The “stories” are made to look like relevant news content, and there is no textual mention that these are all pay-for-placement ads. This doesn’t just happen for news websites but also for Facebook with suggested posts, Twitter with promoted tweets, and on and on. This type of advertising is called “native advertising”. You’d have to dig a bit deeper to find out if this is paid or organic content. The question then becomes whether native advertising is fair to the consumer or is it ‘deceptive advertising’?
The Federal Trade Commission (FTC) – the body that regulates online advertising – defines an action as deceptive: “If it is likely to mislead consumers who are acting reasonably under the circumstances and if it would be material to their decision to buy or use the product.”
The FTC has been bringing cases against ads masquerading as editorial content since 1917 (the first case was against a newspaper ad for an electric vacuum cleaner). But digital media has put what the FTC once termed “masquer-ads” on steroids. Under-staffed regulators are being asked to protect the consumer’s best interest while companies like Facebook continue to gain market share through native advertising. So much so that according to eMarketer, spending on native advertising in U.S. media rose by more than 20 percent last year to $1.8 billion and is expected to exceed $3 billion by 2017.
Regulation is trying to be effected to curb some of these ads. The FTC created a PDF – .com Disclosures: How to Make Effective Disclosures in Digital Advertising – on the subject. The key principle behind the FTC’s policy is whether an ad is “clear and conspicuous”. However, with an industry so large and powerful, ‘regulation after the fact’ may be nothing more than a moral victory. The industry is continually growing so it will be a tall task to ask the FTC to even consider becoming a regulatory body within advertising. It’s not to say that the art of advertising must be regulated because if it is done correctly then native advertising is more effective than traditional advertising. The balance must be struck by the advertisers themselves who must listen to the public to see what works most effectively.
Technology is obviously becoming a prevalent accessory to daily life which is why advertising companies will always be a step ahead of regulation. Issuing guidelines is a step in the right direction but companies will become the ultimate judge and jury as to the direction and pervasiveness of native advertising. Based on the FTC , much of the native advertising out there is likely in violation of guidelines. Native advertisers are making lots of money while receiving little to no punishment or regulation from the FTC. This may not be what’s best for the consumer at the moment but it’s a first step in helping the industry understand and define the new native advertising model. It’s very much a work in progress.